Crisis could spell opportunity for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — at least this is what Citigroup thought of the top management changes last week at the world’s biggest contract chipmaker.
Contrary to most analysts’ view that the return of Morris Chang (張忠謀) as chief executive officer would prompt concern over the company’s long-term succession plan, Citigroup said the 78-year-old Chang would help re-energize TSMC, while former CEO Rick Tsai (蔡力行) might have his job back in a few years.
“We see Chang’s return as positive, not negative,” Citigroup analyst Andrew Lu (陸行之) wrote in a client note on Monday. “After earning very good credibility from the market, we believe Tsai might still be able return as CEO within three years.”
Last week, TSMC announced its board of directors had appointed Chang to replace Tsai as CEO and moved the latter to head a new division within the firm developing green energy business. The board retained Chang as chairman, TSMC said in a statement on Thursday.
While Chang last week dismissed speculation that Tsai’s “demotion” had anything to do with employee layoffs over the past few months, many analysts, including Pranab Kumar Sarmah of Daiwa Institute of Research (Hong Kong) Ltd, said this may have been one of the reasons behind the move.
Citigroup nonetheless viewed the layoffs as unavoidable amid the global economic downturn.
“We see the 5 percent layoff as a necessary evil for TSMC and for investors, as sales for 2009 and 2010 are expected to be down between 10 percent and 20 percent from 2008 levels,” Lu said in the note.
As TSMC owes much of its success in the past 20 years to the efforts of its founder, Chang, Citigroup believed his presence could prove equally effective during this transition.
“We believe Chang can rebuild the centripetal force on employees after the recent layoffs,” Lu said. “He was never hands-off on major changes at TSMC in recent years, when Tsai was CEO.”
Tsai was appointed CEO at TSMC in 2005 and has been with the company for 20 years. He is now president of the firm’s New Business Development Organization, which is charged with developing solar cells and light-emitting-diode products.
“Up until now, we just do not know who would be more qualified than Tsai if Chang retired,” Lu said, adding that some senior managers could be reshuffled as well, without elaborating.
Chang is already 78 years old, nearly 20 years older than most CEOs in Taiwan’s high-tech sector. TSMC has a vice chairman, three senior vice presidents and 10 vice presidents at its executive level, the company Web site showed.
Citigroup said Chang could help navigate and push TSMC to increase its competitiveness in wafer manufacturing and other integrated circuit-related services, including at its wafer fabrication plant in China.
Eyeing China’s cheaper labor cost and bigger market potential, TSMC set up an 8-inch fab in Shanghai in 2003, while rival United Microelectronics Corp (UMC, 聯電) owns a 15 percent stake in Chinese chipmaker He Jian Technology (Suzhou) Co (和艦).
But as UMC’s board of directors agreed in April on a proposal to acquire the remaining 85 percent stake in He Jian, industry watchers have viewed the move — if it is successful — as a growing challenge to all chipmakers doing business in China, including TSMC.
“We believe Chang will refocus on the China fab, which was poorly run compared with that at He Jian,” Lu said.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
CHANGING JAPAN: Nvidia-powered AI services over cellular networks ‘will result in an artificial intelligence grid that runs across Japan,’ Nvidia’s Jensen Huang said Softbank Group Corp would be the first to build a supercomputer with chips using Nvidia Corp’s new Blackwell design, a demonstration of the Japanese company’s ambitions to catch up on artificial intelligence (AI). The group’s telecom unit, Softbank Corp, plans to build Japan’s most powerful AI supercomputer to support local services, it said. That computer would be based on Nvidia’s DGX B200 product, which combines computer processors with so-called AI accelerator chips. A follow-up effort will feature Grace Blackwell, a more advanced version, the company said. The announcement indicates that Softbank Group, which until early 2019 owned 4.9 percent of Nvidia, has secured a
RSS